Correlation Between Under Armour and Torm PLC
Can any of the company-specific risk be diversified away by investing in both Under Armour and Torm PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Under Armour and Torm PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Torm PLC Class, you can compare the effects of market volatilities on Under Armour and Torm PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Under Armour with a short position of Torm PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Torm PLC.
Diversification Opportunities for Under Armour and Torm PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Under and Torm is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Torm PLC Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torm PLC Class and Under Armour is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Under Armour C are associated (or correlated) with Torm PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torm PLC Class has no effect on the direction of Under Armour i.e., Under Armour and Torm PLC go up and down completely randomly.
Pair Corralation between Under Armour and Torm PLC
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 2.35 times more return on investment than Torm PLC. However, Under Armour is 2.35 times more volatile than Torm PLC Class. It trades about 0.11 of its potential returns per unit of risk. Torm PLC Class is currently generating about -0.41 per unit of risk. If you would invest 806.00 in Under Armour C on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Under Armour C or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Torm PLC Class
Performance |
| Timeline |
| Under Armour C |
| Torm PLC Class |
Under Armour and Torm PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Torm PLC
The main advantage of trading using opposite Under Armour and Torm PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Torm PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Torm PLC will offset losses from the drop in Torm PLC's long position.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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